Jun 13, 2017

How the Death of Net Neutrality Could Hamstring the Internet of Things

Consumers will certainly pay more - and have far less recourse - if net neutrality is eliminated. But from a business standpoint, the bigger threat may be to manufacturers of electrical and electronic devices who could find that the major internet service providers- eg the telecoms - are charging extra for gadgets not of their own manufacture, or not of their alliance partners.
Since many of those devices are manufactured by non-US companies or made outside the US, a trade war could ensue, affecting among others, content and connectivity. Which is why ISPs may want to be careful what they wish for. JL

Karl Bode reports in Tech Dirt:

What will stop these companies from expanding in to the internet of things realm to corner the home
automation and security market? They'd implement new pricing paradigms that require additional payments to connect "formally approved"
devices to the network to ensure the "best security and optimal
performance":Providers might force you to rent a cable modem
or WiFi router the same way you rent a cable box, or charge for each computer or IoT gadget you connect
to the web instead of one flat fee for an internet connection that
supports all devices .

So we've already spent a lot of time talking about how underneath the hype, the "internet of things" is a bit of a shitshow. A lack of device security and a general apathy toward anything resembling privacy standards has resulted in an absolute torrent of new attack vectors being introduced into millions of homes and devices nationwide. Many of these devices are being quickly compromised in a matter of minutes for use in historically massive DDoS attacks, and most security analysts believe it's only a matter of time before they contribute to an attack on essential infrastructure putting notable lives at risk.
But the internet of things segment is facing another threat: the looming death of net neutrality.
We've already watched as large ISPs have used their market power to force you to upgrade to more expensive broadband tiers if you want certain services (like Facetime) to actually work. We've watched as ISPs have imposed completely arbitrary and unnecessary usage caps and overage fees, then used those punitive limitations to give their own streaming services a leg up on smaller competitors. And we've watched as Comcast simply refused to let its broadband customers use the hardware of their choice, using a rotating crop of faux-technical, nonsensical justifications.
So as the FCC looks to effectively strip away most meaningful oversight of these broadband duopolies, what will stop these massive companies from expanding these behaviors into the internet of things realm as they try to corner the home automation and security market? If your answer is "jack shit," you win!
Several startups and former FCC boss Tom Wheeler warned Wired this week that the kind of anti-competitive incumbent ISP behavior we've seen already well documented in other segments will be certain to manifest itself in the IOT space, eventually. Why wouldn't companies with thirty years of documented anti-competitive behavior use the death of net neutrality to give their own (or paying partner) IOT products, a leg up?:

"For example, imagine Comcast or Verizon partnering with a few select internet connected smoke detector companies and then delaying notifications from smoke detectors made by other companies. New companies could not meaningfully enter the market without partnering with these major internet service providers. After all, who wants a slow smoke detector? "The future could end up being controlled by four companies," Wheeler says. "That's why open networks are important."

Given what we've seen from ISPs so far, there's really not much reason to doubt they'd also try to implement new pricing paradigms that somehow require additional payments to connect "formally approved" devices to the network to ensure the best security and "optimal performance":

"Without the FCC's net neutrality rules, providers might also be free to force you to rent a cable modem or WiFi router the same way you already have to rent a cable box, or even to charge you for each computer, tablet, or IoT gadget you connect to the web. Instead of one flat fee for an internet connection that supports all your gadgets, you could end up having to manage multiple subscriptions."

This isn't just some hyperbolic, overly-dramatic parade of potential horribles. We've already watched these very same companies block mobile payment companies they didn't want to compete with. And we've watched as they've fought tooth and nail to prevent consumers from being able to buy and use the cable boxes of their choice. Why wouldn't these giant ISPs press their advantage after spending millions in lobbying? Especially when the FCC is clearly signaling that we're entering an era of zero accountability for some of the least liked companies in America?
To be clear, even if the FCC does kill net neutrality rules later this year, large ISPs likely won't engage in this behavior right away. AT&T has a Time Warner merger to get approval for, and Verizon, Comcast and Charter will want to make it appear like blindly gutting oversight of the uncompetitive sector isn't going to be the epic shitstorm most of us know it will be. But sooner or later, without adequate safeguards, the lesser angels of these companies well-documented natures will shine through, and that could spell significant trouble for consumers and startups alike that run afoul of massive duopolies' IOT, home automation, and home security ambitions.

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As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance.Learn more...